U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19431 / October 18, 2005
SEC v. FairPax.com, FairPax, Inc. and John Does 1-20, (United States District Court for the District of New Hampshire, Civil Action No. 04-228-JD ).
COURT ENTERS DEFAULT JUDGMENT AGAINST FRAUDULENT WEBSITE THAT IMPERSONATED A NEW HAMPSHIRE MUTUAL FUND
The Commission announced today that on October 12, 2005, the Honorable Joseph A. DiClerico, Jr., United States District Judge for the District of New Hampshire, entered a judgment by default against FairPax.com, FairPax, Inc. and the unknown owners and operators of FairPax identified as John Does 1-20. In a complaint filed on June 21, 2004, the Commission alleged that FairPax.com was impersonating a New Hampshire mutual fund complex and promising investors returns of 657% per year. The court's judgment permanently enjoins the defendants from violating the federal securities laws.
The Commission's complaint alleged that the FairPax website contained descriptions of purported socially responsibly mutual funds that were taken verbatim and without authorization from the description of the high yield mutual fund offered for sale by a registered New Hampshire-based mutual fund complex, Pax World Funds. FairPax also falsely identified Pax World's chairman and president as its own. The Commission's complaint further alleged that the mutual funds offered by FairPax had not been registered with the Commission, as required. Finally, the Commission's complaint alleged that the defendants promoted their scheme with fraudulent promises of a 657% annual return.
The Court's final judgment enjoins defendants from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
For further information, please see Litigation Release No. 18761 (June 24, 2004).